in 1998 we had about 7500 stocks in the wilshire 5000 index ....today we have 3350 left ....we have more money then ever chasing less than half the stocks .....mergers , bankruptcies, private equity , have all removed half the market over the yearsThe market doesn't seem to make a lot of sense right now. It's very fickle but is fascinating to watch.
While I do think there will be another big dip over the next few months, the fact that there is so much cash on the sidelines looking for some type of return will keep the market from going too low. Throw in future Fed action and foreign investors looking for a safer haven, and the market won't crash and burn.
There are a few reasons why I think there will be another dip. One is that some will be shocked when they see actual reports of no to low earnings. Knowing it's going to happen is one thing, but seeing it may be sobering. Another reason is because of companies cutting buybacks. Finally, many companies will slide into bankruptcy with some never re-emerging. Whether this will have a cascading effect remains to be seen.
Admittedly, I know nothing, and everything the market does is now a surprise. I think we are living in a fake economy with too low interest rates allowing/creating havoc, but since that is not expected to change for a very long time, we're stuck with an over-valued stock market. Until it's not.